In my last post on the SPI hourly, I mentioned that I thought shorts were a goodly option...
Updated chart:
The blue arrow on price marks the point where I was seeing the possibility of a short trade...
Reasons behind that possibility: Equal measure move completed from first wave (Red vertical line segments show equal measures, red thin horizontal line shows price level.
Strong divergence on the moving averages of the MACD (marked by red ellipses)
Divergence showing on the stochastics.
Indeed some downside did ensue... and in doing so performed a neat little three wave which was quickly retraced and a resumption of the trend occurred all be it a little messily.
I beleive there is a case for the small amount of downside mentioned from the blue arrow for that downside being part of wave 4 of an up trend, with the possibility that said 5 waves uptrend completed at around the dotted horizontal line, and the current action is in the form of an ABC.. current leg B though I am reaching a bit here.... However the current structure of the small uptrend does ahve a b like qulaity to it...
Mkay... going back to the chart, I placed a fibb extension on the first "correction" and note with some amusement that the 1.618 extension coincides nicely with the black dotted horizontal line at the top of the chart... this line is a historical level made on price reaction to the may 6 "flash crash" caused a gap.
Perhaps a good location for this Uptrend to end?
I note as marked on the MACD moving averages with the blue arrow in the lower pane, that the turn from the latest low resulted in a positive "bracketed bar" tell, followed by another positive in the opposite bracketed bar afterwards.
This does suggest there may STILL be some upside available in the short term... However I do note in the higher DAILY timespan, there may be a few indications that trend exhaustion MAY be nigh.
Daily:
Firstly the stochastics... I note that practically every time in the last 6 months that stochastics have first reached this level on entry to the over bought region, the following day or two were negative... By no means does this mean that a trend was stopped when the stochastics on this time span reached the current levels, but it certainly seems to provide a pause.
Price... Price is currently testing the upsloping trendline caused by the sequence of lows from the flash crash low, marked as point 8 on the chart. Aftrer a break of the trendline in late June, this could be the required retest... and failure... however note that from yesterday, the first test of this trendline did result in some downside, but that downside has fairly quickly been recovered...
Now, that's about all I have to cover at the moment, Not enough signals saying that upside is over, but a few suggesting that it may be time for a pause in the next day or two.
I note that with the loose correlation between currencies and indices, that the AUDUSD as mentioned in a forex forum post is showing POTENTIAL of completion of currrent uptrend, and there may be something in the correlation twixt that pair and the spi to prompt caution towards longs and suggestions towards shorts.
(20min delay)